Tilray, Inc. Reports First Quarter 2019 Financial Results
Revenue Rises 195.1% to $23.0 (C$31.0) Million in the First Quarter; Company closes two acquisitions: Manitoba Harvest and Natura Naturals
NANAIMO, BRITISH COLUMBIA – Tilray, Inc., (“Tilray” or the “Company”) (Nasdaq: TLRY) a global leader in cannabis research, cultivation, production and distribution, today reported financial results for the first quarter ended March 31, 2019. All financial information in this press release is reported in U.S. dollars, unless otherwise indicated.
“We are pleased with our first quarter results and the ongoing, substantial progress our team has made to position Tilray as a global leader in the cannabis industry,” said Brendan Kennedy, Tilray President and CEO. “We have made significant progress integrating our recent acquisitions of Manitoba Harvest and Natura Naturals, accelerating our entry into the United States hemp and CBD markets, and increasing our production and manufacturing capacity in North America and Europe. As we expand our operations around the world, we remain focused on making disciplined investments to maximize the multiple paths to value creation we are aggressively pursuing for our visionary investors.”
First Quarter 2019 Financial Highlights
Revenue increased 195.1% to $23.0 (C$31.0) million, compared to the first quarter of last year, driven by the legalization of Canadian adult-use in 2018, the addition of hemp food sales from the Manitoba Harvest acquisition during the quarter, and strong growth in international medical markets. Excluding excise tax, revenue was $21.5 million.
Total kilogram equivalents sold increased over two-fold to 3,012 kilograms from 1,299 kilograms in the prior year period.
Average net selling price per gram decreased to $5.60 (C$7.54) compared to $5.94 (C$8.00) in the prior year period. The average net selling price excluding excise taxes was $5.28 (C$7.02) per gram for the first quarter of 2019.
Gross margin increased sequentially to 23% from 20% in the prior quarter. Gross margin in the first quarter of 2018 was 50%. Gross margin continues to be impacted by increased costs incurred with the ramping up of cultivation facilities in Canada and Portugal and acquiring third party supply. Additionally, food product margins were impacted by an approximately $0.7 million non-cash charge related to purchase accounting for the fair value of inventory. The remaining non-cash charge of approximately $1.4 million will be incurred in the second quarter of 2019.
Net loss for the quarter was $30.3 million or $0.32 per share compared to a loss of $5.2 million or $0.07 per share for the prior year period. The non-GAAP adjusted Net loss for the quarter was $25.2 million or $0.27 per share for the first quarter of 2019. The adjustments to the net loss are non-recurring acquisition related charges. Adjusted EBITDA was a loss of $14.6 million compared to a loss of $3.2 million the prior year period. The increased net loss and Adjusted EBITDA declines were primarily due to the increase in operating expenses related to growth initiatives, the addition of Manitoba Harvest, and the expansion of international teams.
Acquired Manitoba Harvest, a hemp and natural foods producer in Winnipeg, Manitoba, for up to $310 (C$410) million, subject to certain revenue milestones. Manitoba Harvest distributes its products to over 16,000 retail locations in the United States and Canada.
Acquired Natura Naturals Holdings, a licensed cannabis cultivation facility in Leamington, Ontario, for up to $54 (C$71) million, subject to certain cultivation milestones.
Completed a long-term revenue sharing agreement with Authentic Brands Group (ABG) to leverage their portfolio of brands and develop, market and distribute consumer cannabis products across the world. The partnership will initially focus on CBD products in the U.S. and THC/CBD products in Canada and expand globally as regulations permit.
Completed a successful harvest of medical cannabis and hosted inauguration at the Company’s European Union (“EU”) campus in Cantanhede, Portugal. The Company expects multiple harvests from this facility in the coming months.
Announced support of two new clinical studies: a pilot study led by Murdoch Children’s Research Institute (MCRI) in Melbourne, to evaluate the feasibility and acceptability of a larger randomized placebo-controlled trial of cannabis extract as a form of treatment for reducing Severe Behavioral Problems (SBP) in pediatric patients with Intellectual Disabilities (ID); and a study with McGill University Health Centre’s Division of Infectious Diseases and Chronic Viral Illness, to examine the effectiveness of medical cannabis on immune activation in People Living with HIV.
Announced an investment of $32.6 million to increase our Canadian production and manufacturing footprint by 203,000 square feet across three facilities in Nanaimo, British Columbia, Leamington, Ontario, and London, Ontario. The investment will expand Tilray’s total production and manufacturing footprint from 1.1 million to 1.3 million square feet worldwide.
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